Swiss Air CEO says no immediate fuel shortage, eyes contingency plans

• SWISS has hedged approximately 80% of its annual kerosene requirements, resulting in only a 20% increase in fuel-related costs so far despite market volatility
• European airlines have warned of potential fuel shortages within weeks due to U.S.-Iran conflict disrupting supply and driving energy prices higher, potentially impacting summer travel
• Contingency plans include 'tankering' practices (currently restricted by regulations) and strategic refueling stops at well-supplied airports like Vienna for Asia-bound flights

Swiss Air CEO Addresses Fuel Supply Amid Industry Shortage Warnings

Swiss International Air Lines (SWISS) has adequate jet fuel supplies for the next six weeks, CEO Jens Fehlinger told Neue Zürcher Zeitung on May 10. Current forecasts from oil suppliers and refineries "are good," though the airline is developing contingency plans as European carriers warn of potential fuel shortages within weeks due to U.S.-Iran conflict disruptions.

Key Developments:

The conflict has curtailed supply and driven energy prices higher, threatening the summer travel season. Fehlinger noted potential shortages would likely appear first in Africa or Asia, with no current signs of such issues.

Contingency Measures:

SWISS and parent company Lufthansa Group are exploring "tankering"—fully fueling aircraft at well-supplied destinations to transport extra fuel back to Zurich. This practice currently faces regulatory restrictions, though discussions with policymakers may allow exceptions. Alternative plans include strategic refueling stops at well-supplied airports like Vienna for Asian routes.

Financial Impact:

SWISS hedged approximately 80% of its annual kerosene requirements, significantly limiting exposure to price volatility. The airline has experienced only a 20% increase in fuel-related costs thus far. However, Fehlinger indicated persistently high oil prices would likely result in higher fares over time.

Market Context:

The situation reflects broader energy market disruption, with the Strait of Hormuz shipping affected by U.S.-Iran tensions. Saudi Aramco separately reported a 25% profit jump in Q1, running its East-West pipeline at full capacity to mitigate supply impacts.

The airline industry faces mounting pressure to secure fuel supplies while managing cost increases during the critical summer travel period.